The process of foreclosure, if taken far enough, can result in a public auction, which basically means you’re about to lose your house. For buyers, this is a great time to score a cheap house with all the fixins’, but for the owner, it can be one of the most difficult periods of a lifetime.
When Is a Home in Danger of Public Auction?
Fortunately for the owner of a home, public auction is the last step in the lengthy process of foreclosure. Usually, the owner will have had to default on the mortgage loan after around three months of missed payments. At this point, the mortgage lender will send what is known as a Notice of Default (NOD), which will alert the homeowner that too many payments have been missed.
If no action has been taken after the NOD has been received, the lender will send out a Notice of Acceleration, which informs the homeowner of the need to pay the full balance of the loan in order to avoid losing the house. If still no action is taken, the Notice of Sale is sent out, which basically alerts the public of the intended sale of the homeowner’s property. At this point, the homeowner still owns the property, but is in danger of the public auction, which usually occurs several weeks later.
In order to save a home, the homeowner should take steps to do so sometime in the process of foreclosure before it is in danger of going to public auction.
What Happens at the Public Auction?
If your home is at risk for public auction, it’s good to learn what happens in this last step of the process of foreclosure. First, an opening bid is set on the property by the lender, usually for the outstanding loan balance, interest that has accrued, and other fees. If bids don’t match the opening bid, the property is purchased by the attorney conducting the sale on behalf of the lender and considered Real Estate Owned (REO). This means, your property will be owned by the lender – however, you still could be responsible for some of the balance.
Going through the process of foreclosure is something no one should have to endure. So if you are currently suffering through this tough circumstance, now is the time to talk to your lender to avoid reaching the point of public auction.